US dollar and Japanese yen face volatility amid market shifts

The US dollar is experiencing a technical rebound following recent volatility driven by U.S. Treasury Secretary Scott Bessent’s movements in the debt market. While the DXY index has seen a slight uptick to 98.94, analysts suggest the dollar remains vulnerable to medium-term risks, including inconsistent intervention strategies and pressure to lower U.S. interest rates, which may fuel carry trade transactions.

In Japan, the yen continues to face significant pressure as the USD/JPY exchange rate has surpassed the 159 level. Despite a joint intervention by the Bank of Japan and the U.S. Treasury in late July, market analysts from UniCredit warn that a passive approach to limiting yen depreciation, rather than an aggressive strategy to strengthen the currency, could prove ineffective. The Bank of Japan may consider interest rate hikes in September following rising inflation, while the effectiveness of previous interventions remains a point of debate among global strategists.